The Sept. 12 USDA World Agricultural Supply and Demand Estimates (WASDE) report for September held little fanfare for traders who had already expected lower yield and production numbers. While corn and soybean numbers were slashed less than expected, the report was neutral to bearish. However, both markets finished sharply higher for the day, supported by mellowing trade tensions between the U.S. and China.

Here's a deeper look at some of the numbers from the Sept. 12 report:

CORN

USDA showed corn yield at a higher-than-expected 168.2 bushels per acre (bpa). That compares to the average trade estimate from Dow Jones of 166.7 bpa and August's USDA number of 169.5 bpa. Using the same harvested acres of 82 million, U.S. corn production fell to 13.799 billion bushels (bb) -- higher than the average trade estimate of 13.614 bb but lower than the August USDA production report of 13.901 bb.

U.S. corn ending stocks for 2018-19 rose from 2.360 bb to a huge 2.445 bb, as both exports and corn used for ethanol were reduced. Ending stocks for 2019-20 were a much-larger-than-expected 2.190 bb, featuring a reduction of corn used for ethanol of 25 million bushels (mb). That's up just 9 mb from August, but nearly 185 mb higher than the trade had predicted. Another notable item from the report was that corn ears per acre were the lowest number since the drought year of 2012, in the 10 states surveyed. Tennessee recorded the only record-large yield.

World corn ending stocks for 2019-20 was pegged at 306.27 million metric tons (12 bb) versus 307.72 mmt in August and trade expectations of 302 mmt. U.S. corn production was 350.52 mmt (13.799 bb) -- down from 353.09 mmt in August. Few other world changes were noted, with major exporters in total just 500,000 mt lower than August at 214 mmt (8.42 bb).

Later Thursday afternoon, USDA's Farm Service Agency (FSA) reported failed acres at 450,363 acres, while prevented planting acres were 11.4 million on corn.

SOYBEANS

USDA pegged soybean yield at a higher-than-expected 47.9 bpa -- lower than the 48.5 bpa used in August, but above the Dow Jones average trade estimate of 47.2 bpa. U.S. soybean production was projected to be 3.63 bb -- slightly above the Dow Jones average trade estimate of 3.596 bb, but below the August production of 3.680 bb. Notable to the soybean survey was that all but one (Kansas) of the 11 states surveyed had a lower pod count than 2018. Harvested acres on soybeans was left unchanged in the Sept. 12 report at 75.9 million acres compared to 88.1 ma in 2018-19.

U.S. soybean ending stocks for 2018-19 dropped by a modest 65 mb on the heels of a 45 mb increase in exports and a 20 mb increase in soy crush, leaving carryout at a still-record-large 1 bb. For 2019-20, ending stocks were dropped to a still-historically-large 640 mb -- down 115 mb from August and just slightly under the average trade estimate.

World soybean ending stocks for 2018-19 were dropped from 114.53 mmt to 112.41 mmt (4.13 bb), and for 2019-20, ending world stocks fell to 99.19 mmt (3.644 bb) from 101.74 mmt in August. Much of that is attributable to China soybean imports being left untouched for 2019-20 at 85 mmt. That compares to China's own number of 84 mmt, and the U.S. Ag Attache's recent projection of just 80 mmt of imports due to African swine fever.

FSA reported failed acres were 64,621 acres and prevented planting acres were 4.459 million on soybeans.

WHEAT

Wheat was expected to have minor changes in the September WASDE report, and that is exactly what happened.

U.S. wheat ending stocks remained unchanged at 1.014 bb for 2019-20, while world ending stocks gained just over 1 mmt to a new all-time-record-large ending stocks number of 286.5 mmt (10.5 bb). World changes amounted to Australian production being dropped 2 mmt to 19 mmt, with minor changes in EU, India, Russia, Ukraine and a 1.5-mmt drop in Kazakhstan.

CONCLUSION

The September WASDE report didn't turn out to be a game changer and reinforced the idea that this year's crops, although planted late and immature -- and affected by both floods and dryness -- were not the disaster that many had warned about midway through the growing season. Only the actual harvest and final acreage results can change that outlook.

In the meantime, Thursday's post-report reaction likely caught the large speculators trapped in a market that has seen plenty of bad news. The higher close in the face of more bearish news may have been affected not only by short-covering, but by some renewed optimism that some ongoing trade deals could have a happy conclusion.